The Administration supports efforts to assist microenterprises as an
important economic development tool. In 1994, with strong support of
Congress and nonprofit microenterprise practitioners, the Administration
revitalized microenterprise development with the Microenterprise
Initiative. The Initiative emphasized support for the poor and for poverty
lending. The U.S. Agency for International Development (USAID) renewed
that Initiative in 1997, with a strong commitment to support microfinance
institutions and poverty lending. The Administration remains committed to
identifying new and creative means for providing assistance targeted at the
poorest of entrepreneurs.

The Administration, however, is concerned that specific provisions of H.R.
1143 would hamper USAID's ability to program microenterprise funds
effectively and to respond to rapidly changing economic conditions. The
Administration, therefore, cannot support H.R. 1143 in its current form,
but will work with Congress to fashion a mutually acceptable bill.

Key concerns with H.R. 1143 include provisions that:

Require USAID to provide half of all microenterprise resources to
organizations providing loans of $300 or less. USAID programs
provide a number of important services to meet the needs of
microentrepreneurs, including microcredit, business training, and
reforming government policies. These needs differ widely depending
on local conditions, and can change rapidly. This provision would
limit USAID's ability to tap the most competitive organizations to
meet specific needs of microentrepreneurs.

Establish a new earmark for microenterprise funds within scarce
development resources. The Administration can ill afford another
earmark that limits its flexibility to respond to world development
needs with limited foreign assistance funds. The Administration
strongly supports microenterprise programs, and will continue to
commit appropriate resources to support and expand microenterprise.

Create an unnecessary new bureaucracy for a microenterprise loan
facility that also raises constitutional concerns under the
Appointments Clause. USAID believes that it can meet the goal of this
provision within current authorities. In fact, USAID worked to
provide just such support to microenterprise institutions in Central
America in the wake of Hurricane Mitch.